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On donors to political parties, we should regard as laudable the fact that organisations and individuals are free to make properly disclosed donations to political parties with which they share aims and aspirations; or in order legitimately to minimise the risk of another party attaining power. People donate to charities and religious organisations and we call it philanthropy, derived from Greek and meaning “love of people”. Yet somehow, when people donate to party political organisations, which are part of the fabric of our society, they are termed “lovers of power”. This cannot be true and is unfair. People who make properly disclosed donations to a party are very much strengthening, not weakening, the fabric of our democracy. We ought to defend them.

Our political system is one to be proud of. All those involved in making the machinery work are rightly deserving of praise. Nevertheless, many of these people are being let down. There is a serious problem and it impacts on the legitimacy of our political process. The Bill is, therefore, of the utmost necessity and we welcome it. We welcome it to this place, on this day and in this form slightly more than we welcomed it in the other place when it was introduced in October. There have certainly been many concessions that we welcome, and which the Minister has outlined to us this afternoon.

We need to remember that this political process has been under way for some time. The Bill is welcome. It is of the utmost necessity and we only want to move it further and faster. It is necessary because of a series of high profile cases, such as the “loans for honours” inquiry, in which, for the first time in history, a serving Prime Minister was interviewed three times by the police. For the record, in this case no prosecution resulted from that. I do not want to be too partisan in making this point because the Liberal Democrats have also had problems, in accepting a donation for £2.4 million from a convicted fraudster, Michael Brown. Again, for the record, the Electoral Commission found that the party had been reasonable in regarding it as a seemingly extremely generous donation, though one that has still not been repaid.

For these purposes, a White Paper was produced and the Lord Chancellor, Jack Straw, used a key phrase in the foreword:

“When political parties are brought into disrepute, the reputation of the entire political process is tarnished. It is therefore important

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that action is taken to strengthen and sustain the standing of political parties within the political process in the eyes of the British public”.

That is why the Bill is both urgent and necessary. We should not limit the examination of weaknesses in the electoral system to the issue of party political funding alone. Whatever the ambiguities about the rules governing cases of donations, there is no ambiguity about one thing. In the last seven years there have been 42—

Lord Clinton-Davis: My Lords, is the noble Lord not being unduly optimistic about the contribution made by members of all parties? I think it has declined, and we all ought to be worried about that. Does he agree?

Lord Bates: My Lords, I share the concern—it is shared on all sides of the House—that participation in all voluntary organisations in communities is declining. Our communities are the weaker for it. We would certainly want to see all measures in this legislation enhance the prospect of people taking part in party political activity up and down the country. I will come to that in a little more detail later on.

Wherever the ambiguities may be about the funding of political parties and party political donations, there is certainly no ambiguity about the fact that, over the past seven years, there have been 42 convictions for electoral fraud in the United Kingdom and only one of the 43 authorities in England and Wales has had no case to investigate. The Council of Europe Parliamentary Assembly's monitoring committee commented that there are,

The Joseph Rowntree Reform Trust stated in its report of April 2008 that:

“There is widespread, and justifiable, concern about both the comprehensiveness and the accuracy of the UK’s electoral registers—the poor state of the registers potentially compromises the integrity of the ballot”.

We take that extremely seriously. This proves that it is not so much the risk of serious fraud at the ballot box that we are talking about. It is happening, and change is urgently required to tackle this aspect of the legitimacy of the process as soon as possible. Furthermore, this opportunity for fraud was significantly increased by the extension of postal voting, as was again found by the Joseph Rowntree Reform Trust report, which said:

“Public confidence in the electoral process in the UK was the lowest in Western Europe in 1997, and has almost certainly declined further as a result of the extension of postal voting”.

As it stands, the Bill is therefore a missed opportunity. It was going to be a calamitous missed opportunity to tackle this important issue but, on Report, just before Third Reading in the other place, the Government finally conceded that they would bring forward proposals for individual voter registration, as the experts have long been calling for. However, it was rushed through at that stage. Many Members of the other place would have preferred that this concession was given in Committee so that it could have been scrutinised by them. So we will be looking to the Minister to provide some assurances and much more detail than we have so far received about how this will operate in practice. What we have been offered so far by the Government is an incomplete system that will not be introduced in a mandatory way

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until 2015. It will not exclude people already on the electoral role, and it will therefore be 2017—possibly two general elections’ time—before we can again have confidence in the veracity of the register. As the Minister has told us today, personal identifiers will be introduced, but only on a voluntary basis. Can that deliver the confidence that we seek?

All of this is happening while this system has been successfully introduced as a pilot in Northern Ireland. The Northern Ireland Office published Electoral Registration in Northern Ireland, which said that voter registration had been central to enhancing the accuracy of confidence in the electoral register. That is the case made. We do not resent them for having it, but why can the people of Northern Ireland have it and why can it not be spread much quicker into the rest of the United Kingdom?

Finally, there are places where the Bill should be toughened and uncompromising. However, there are also areas, relating to local associations and committees having responsibility to appoint an effective compliance officer in order to identify the source of donations over £500 on pain of criminal offence, which seem to us to go too strongly in the other direction, to the extent that they could discourage legitimate volunteers from taking on those places, or legitimate donors from making donations to the party. It is important to recognise that at a local level, the association, committee chairman or organisers are not qualified lawyers, they do not have access to the best city regulators and they do not have teams of accountants working for them. They are often working by themselves, late into the night and on a voluntary basis, and trying to follow the rules. It is very difficult for them, particularly when the rules change with such frequency.

Therefore we propose two suggestions: first, that there ought to be a defence of innocent mistake; and secondly, that the threshold required for registration—rather than being reduced from £500 down to £200, as was hinted at early on in this debate—should actually be raised to £1,000, to take in many more donations and potential donations, and to remove lots more bureaucracy from this. I understand that the Minister finds this slightly puzzling, but of course this particular element is all about trying to answer the problem which arose from the David Abrahams donations scandal, when it was alleged that donations of £600,000 had been made to the Labour Party through a series of proxies. We understand that that is unacceptable, and that we need to restore confidence to the system. However, we feel currently that moving that threshold to a higher level would help with that, whilst doing nothing to diminish the prospect of catching the serious abuses, which is what we are looking for.

I have spoken about some of the measures which we hope to see this Bill address as it goes through Committee. We feel that this Bill has been framed in such a way as to provide a missed opportunity for a long-term, sustainable settlement with regard to party donations from trade unions, companies and individuals. However, the Government’s many concessions in another place mean that this Bill is now in a format that for the most part we welcome.

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4.52 pm

Lord Tyler: My Lords, I should first indicate a non-pecuniary and past interest as a member of the cross-party informal advisory group to the Electoral Commission. I should also apologise at the outset on behalf of my noble friend Lady Hamwee, who will table some important amendments at a later stage on elections to the London Assembly, but who is unfortunately not able to be with us today.

I have begun to realise that this House takes great notice of experience. I should put it on record that I am the veteran of 12 parliamentary and county elections, and I have perhaps also to recall that I won half of those, which is a better record than some of my colleagues on these Benches. Experience is important, and I note with interest that there are in the House a number of noble Lords who obviously will be able to contribute very substantially from that experience to our discussions on the Bill. The noble Lord, Lord Bates, has had perhaps less experience in that respect and that may explain why he started his speech with tones of comparative complacency about the state of British politics, which I do not share.

It is rare that we are given the opportunity to improve not just one piece of legislation, but the public perception of our whole political system. We are going to have to use this Bill to take up that opportunity, even if the Government at present have failed to do so. After all, Minsters have trumpeted this as a great opportunity—a great vehicle— to take big money out of British politics and to increase the transparency of donations and spending from what remains. The Bill does not do that. It does not return political influence from the cheque book to the ballot box and it still places a cloak of secrecy around many large donations. In short, the Bill has gone through an elephantine period of gestation, but we have ended up with a mouse. It is a failure, and we in this House have a particular responsibility to turn it around and make it into a success.

The public surely are demanding cleaner politics. The incidence of cash for peerages, loans for Lords, bungs for amendments: all these episodes have tarnished the reputation of Parliament, this House as well as the other House. However, these are merely symptoms of a much more insidious disease—the reliance of the party system on big political donations. It is a rotten system. Contrary to popular perception, it places Britain in an even worse position than the United States. American election campaigns are expensive—astonishingly expensive—but they are also reliant on a broader base of funding. Donations are limited to $2,400 per election from individuals to any given candidate. Even the higher limits of $30,400 for donations to national party committees are much lower than the amounts now given to British political parties. Surely we should be aiming for our legislation to be at least as stringent as that in the United States.

There are three ways in which we on these Benches think that politics can and should be purged of narrow special interests brought about by big donations and the sharp focus on a small number of marginal constituencies. The first—no Liberal Democrat could come to a debate of this sort without referring to it—is

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electoral system reform. We must have reform to ensure that every vote, everywhere, counts. The second is certainty about the timing of general elections, to make it absolutely clear when spending limits will begin. The third is an end to what is currently referred to so regularly as the party-funding arms race. We cannot use this Bill to do the first two but we can make real progress on the third. I trust that this House will take the lead in that respect.

Surely we must adopt an all-embracing cap on the individual donations to political parties. If we do not, we will be in danger of slipping back to the worst, corrupt excesses of the 19th century when the wealthy could buy seats and political influence. Surely we must also give every constituency an equal spending limit regardless of its marginality, by dividing the national spending limit by the number of seats. If we really are to end the arms race in marginal seats, we have a duty to amend this legislation in such a way that it covers not only local spending to promote a candidate but national spending which has been used to promote his or her party in any given constituency.

If billboards saying, “Britain—Forward not back”, or, alternatively, “Mum’s eyes. Dad’s nose. Gordon Brown’s debt”, are plastered all over a specific constituency, it should be attributed to the party’s election expenses in that constituency, not just to the national limit. That principle was accepted at the end of the 19th century and surely it must apply now. I am quite willing to accept that if my right honourable friend Nick Clegg writes to a group of electors in a specific constituency, that expenditure must also be the responsibility of the local agent and recorded against the local limit.

Some Members of your Lordships’ House have great experience in this and have been involved in constituency campaigning for many years. They will be only too well aware of the expenses limit on the specific candidate and his or her agent in that constituency and how important it is to observe those ceilings. However, if we do not make a real change to the Bill as it stands, we will be ripping up all the constraints and safeguards that have been in place ever since the 1883 Act. That would be a terrible retrograde step. We must also look again at the recording and reporting thresholds specified in the Bill.

There is a real danger that the Bill will allow a series of impermissible donations to be made from beyond these shores. The Electoral Commission itself draws attention to a real question mark by saying that the Bill as it stands,

It would therefore seem to be possible for someone from Belize, for example, to contribute £499 every day of the year without it being necessary to report it. That is absurd. Clause 13, by increasing this limit, is in fact a dangerously retrograde step.

What is most extraordinary is that the Conservative Members in another place sought to increase the reporting limit still further. That is the point at which donations not only have to be verified as permissible but their source declared on the public record. The Conservative Members sought to increase the limit for

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reporting donations to £3,000. That, surely, would be a backward step. What is more, I am confused by the position of the Conservative Party. I looked at Hansard for December 2007 when Conservative MPs were so exercised by the need to introduce an overall cap on donations that they called a special Opposition Day to debate their call for,

Yet those same MPs considered the Bill on Report at the end of last year and were unable to support my honourable friend David Howarth’s amendment to introduce such a cap, arguing that it was “for another day”. Why was it so essential to restore public confidence in 2007, but it is too early to do so in 2009?

I and my colleagues in both Houses believe that the Hayden Phillips proposals on party funding were well considered and we endorse them. We were bitterly disappointed when in the autumn of 2007 the other parties pulled the plug on the discussions, apparently in pursuit of their own special interests. However, we have a responsibility now to build on those proposals, not only to deal with the current crisis of confidence in our political system, but to make sure that we deal with it in a way that stands the test of time.

The Phillips proposals to which the Minister referred dealt with, first, caps on donations and loans to national political parties; secondly, the introduction of sensible safeguards for individual union members’ political contributions; thirdly, spending ceilings for the whole Westminster electoral cycle; and fourthly, the suggestion of a broadly based scheme to encourage local campaigning with limited public funding. The Phillips package offers an essential starting point for discussing this Bill.

Sadly, however, the Bill as it stands will certainly not achieve the changes on which all parties were originally agreed. We cannot use this Bill, obviously, to introduce the sanity of a fixed-term Parliament, much though that might be desirable, but we should at least amend the Bill to make sure that there is a level playing field on campaign finance for all elections, not just for the special circumstances of the present time. It is manifestly wrong at any time to legislate only for the existing situation in the full knowledge that this Parliament is likely to last 60-plus months. Very few Parliaments in recent years have gone beyond 48 months; in fact only two elections in the past 12 have gone full term. Imagine the free for all in those other 10 if there were no restrictions at all under this Bill.

I was first elected in February 1974 and the next election was in October 1974. What would happen in those circumstances? We would not have got anywhere near the 55-month trigger point; it would have kicked in 48 months too late. The measures in the Bill will apply only when a tired old Government are desperately hanging on and not daring to face the electorate. That is surely absurd; that is making the rule for the exception rather than the generality. We must investigate ways in which the investment in campaigning for all general elections can be effectively monitored and limited.

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Ministers must rethink the contortions that they have put themselves in over the issue of a proper fixed-term Parliament.

Some Members of your Lordships’ House may recall that as long ago as 1992 Labour recognised this problem in its election manifesto. It summed up the problem in this way:

“Although an early election will sometimes be necessary, we will introduce as a general rule a fixed parliamentary term”.

I see the noble Baroness, Lady Gould, echoing those words; for all that I know, she may have written them. What has happened to that promise in the intervening period?

Other issues will have to be dealt with. I give notice to the Minister that we will seek to remove Clause 17. This was based on a clause produced by a Conservative Back-Bencher, which managed to produce an extraordinary situation in the other place whereby there was a Division without the new clause being moved. I draw the Minister’s attention to the House of Commons Official Report, 2 March 2009, col. 678.

Lord Bach: My Lords, I hope that the noble Lord is not blaming the Government: this was a matter for the Chair in the other place. The noble Lord knows that as well as I do, so I hope that he is not going to leave any kind of false impression.

Lord Tyler: My Lords, I am grateful to the Minister. I will draw attention also to the fact that his right honourable friend the Secretary of State and the Minister in charge of the Bill both voted against the inclusion. I give notice that we regard that as an improper addition to the Bill.

Lord Bach: My Lords, it is our intention that there should be a free vote on that provision in this House, as there was in the other place.

Lord Tyler: My Lords, it is extraordinary. It is not for us to criticise the way in which the other place does business, but there were other new clauses that had wide support across the parties on all Benches. One was signed by 216 MPs, yet was excluded from debate and denied a vote.

As the Minister knows, I and my noble friends, and my right honourable and honourable friends at the other end of the building, consistently supported the Electoral Commission in its strong recommendation that individual registration is urgently preferable to the current reliance on the head of household. We believe that the integrity of the register is crucial to the reputation of our whole electoral system. We do not believe that registering more people is in itself legitimate if it has to rely on fraudulent additions. I understand that the commission recommended the change in 2003. What has happened since then? The long process to which the noble Lord, Lord Bates, has just referred could have been well under way by now if the Government had listened to their own advisers. As we are threatened with an extraordinarily long transition period to 2017, beyond two elections, surely it is time to get on with it.

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In brief, it is extremely important that the Electoral Commission is now given the resources and powers to keep the difficult balance between ensuring the integrity of the political system and avoiding excessive burdens on volunteers. It is far from clear that the Government have recognised the nature of this dilemma. Meanwhile, we in this House should be under no illusion that the Bill offers us a rare opportunity, and therefore we should be absolutely clear that it is important to do it justice in order to make sure that we restore public confidence in our political system. As it stands, the Bill does not meet the clear concerns of the public, and we have a manifest duty to strengthen it.

5.07 pm

Lord Neill of Bladen: My Lords, I declare an interest, which the Minister alluded to: I was chairman of the Committee on Standards in Public Life. The noble Lords, Lord Goodhart and Lord MacGregor, were also members. The other representative of a political party was the late lamented Lord Shore—Peter Shore. They were the trio who represented the three parties. We produced the committee’s fifth report, which, as the Minister said, was substantially accepted by the Government, went through and led to the Act of 2000.

I will pick up on certain themes and talk about them briefly. The first is individual registration, which was mentioned by the previous two speakers. As the noble Lord, Lord Tyler, said, in 2003 the Electoral Commission advocated individual registration and said that it was essential. The commission put it on high ground; it said that it was a fundamental democratic right to register your own vote. We could argue about that, but that was the commission’s position and it has been an important element in thinking about politics ever since. It is unfortunate that we in this House cannot, in this Second Reading debate, discuss the clauses that give effect to this idea. The Government said on Report in another place that they were bringing forward the clauses, as the Minister confirmed today. However, the process is very slow and the clauses are very late. I hope that we will not be in the position that I remember when a different Bill came from another place and one-third of it had not been debated there at all. Here we have an important part of the Bill that deserves consideration at Second Reading, but we have no specific clauses on which to focus. Having made that complaint and lament, I move on.

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